We often hear the statement, “When oil supply is lower, oil prices will rise because of scarcity.” Now, we are getting to see firsthand whether oil prices really do rise, as oil supplies become more scarce.

Figure 1. Figure from the OPEC Monthly Oil Market Report for August 2019 showing world and OPEC oil production by month.

Figure 1 shows that world oil supply hit a peak in November 2018 and has declined since then, mostly because of a decline in OPEC’s production. So, total oil production seems to be down for about eight months, relative to the peak in November 2018.

Despite this big cutback by OPEC in its oil production, prices have not responded as OPEC had hoped:

Figure 2. Average monthly spot Brent Oil prices, based on EIA data.

In fact, as I write this, Brent oil price is currently quoted as $60.48, which is back in the range of December 2018 and January 2019 low prices. Also, reducing production doesn’t seem to be reducing inventories. Figure 3 suggests that they are now higher than they were before the reduction in oil supply took place.

The basic issue is that the economy is very much interconnected under the laws of physics, because energy is required for every activity that is considered part of GDP. Energy is required for any kind of heat or any kind of movement. Energy is even required for electricity. Without energy from the sun, food can’t grow; without supplemental energy of some kind (such as using electricity to heat an electric stove or burning animal dung or sticks), it becomes impossible to cook food or smelt metals.

One strange phenomenon that arises from the interconnected nature of the economy is the fact that the prices of all energy products (including those not listed on Figure 4) tend to move together.

Figure 4. Comparison of changes in oil prices with changes in other energy prices, based on time series of historical energy prices shown in BP’s 2019 Statistical Review of World Energy. The prices in this chart are not inflation-adjusted.

This strange phenomenon arises because energy products are well-buried within every part of the world economy. A person’s job requires energy consumption. The tasks that governments do, such as building roads and schools, require energy consumption. Both transporting and cooking food require the use of energy products. Refrigerating food requires energy products. These energy uses, as well as many other everyday hidden uses of energy, aren’t things that we can easily cut back on.

Consumers often think, “I will drive less, and that will cut back on my energy consumption.” Unfortunately, in the whole scheme of things, whether or not individuals cut back on their optional use of gasoline doesn’t get the world economy very far. Gasoline accounts for about 26% of world oil consumption, or about 8.7% of total energy consumption, based on the most recent BP energy data. Cutting back on the optional use of gasoline would not reduce total consumption very much. If it were possible to reduce gasoline consumption by 10% by voluntary cutbacks, it would still reduce world energy consumption by less than 1%.

The strange pattern of the price changes shown on Figure 4 indicates that there is something affecting energy prices of many kinds, simultaneously. I would describe this as “affordability.” It has to do with how affordable finished goods and services are to the population in general, much more than it does scarcity. (Economists call this affordability issue “demand.”) If finished goods and services are affordable to a large number of consumers, as they were in 2008 and in 2012 and 2013, prices will be bid up to very high levels (Figure 4). If finished goods and services aren’t very affordable, a drop-off in prices, such as that experienced in November and December of 2018 (Figure 2), is likely to occur.

When OPEC decided to cut back its production of oil in response to the low prices in late 2018, this cutback in oil production didn’t help the affordability of finished goods and services. In fact, this cutback probably made the worldwide total quantity of affordable finished goods and services a little lower. This happened because, with the cutback in oil production, the governments of OPEC countries were able to collect less tax revenue on the smaller quantity of oil that the countries were selling. In fact, this smaller quantity of oil wasn’t even being sold at a higher price.

With lower revenue, governments of OPEC countries are being forced to cut back on funding of new projects such as roads and schools. These projects will use fewer energy products, and the would-be workers will have less money to spend on goods made with energy products. Thus, these cutbacks help to lower the world’s “demand” for oil and other energy products and thus help lower the price of oil.

The fact that the economy is interconnected in this strange way makes shifting prices upward much more difficult than if scarcity were the primary issue. In effect, the whole stack of energy prices in Figure 4 must somehow be made to rise. This is difficult to do because it is the lack of wages of the many poor people around the world that is holding back “demand” for energy products. If, somehow, higher wages could be sprinkled on the many poor workers of the world, including those in India and Africa, then oil (and other energy) prices would tend to rise. With higher wages, these poor people would be able to afford items such as nice homes, cars, and air conditioning, pulling world food and energy demand upward.

One difficulty with rising oil (and other energy) prices: They don’t translate into rising wages.

Rising oil prices tend to cause recessions and layoffs. We can see this from historical data. Average wages, considering layoffs, tend to fall rather than rise during times of spiking oil prices. In fact, the chart seems to suggest that the big increases in average wages tend to occur when oil prices are under $40 per barrel. A growing supply of cheap energy thus seems to be the magic ingredient that shifts wages upward.

Figure 5. Average wages in 2017 US$ compared to Brent oil price, also in 2017 US$. Oil prices are from BP’s 2018 Statistical Review of World Energy. Average wages are total wages based on BEA data adjusted by the GDP price deflator, divided by total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Because of this difficulty with spiking energy prices, high energy prices tend not to last for very long. One issue is that regulators quickly raise short-term interest rates to solve what they perceive as “the problem of rising food and energy prices.” Once recession sets in (gray bars in Figure 6), regulators find that they need to lower interest rates and raise the level of debt to stimulate the economy again. With lower interest rates and more debt, major purchases (such as homes, cars, and factories) become more affordable, because purchases bought on credit have lower monthly payments. With greater affordability, food and energy prices again rise, to again encourage more production.

Figure 6. Three-month and ten-year interest rates through July 2019, in chart by Federal Reserve of St. Louis.

So we end up with an endless see-saw of energy and food prices. In fact, the peaks have tended to fall lower and lower since 2008, as can be seen in Figure 7, showing monthly average prices.

Figure 7. Monthly average Brent Oil prices since January 2000, based on data of the US Energy Information Administration.

Monthly average peaks started at $132.72 in July 2008. More recently, peaks have fallen as follows:

Peak of $125.25 for the month of March 2012

Peak of $109.54 for May 2014.

Low month average price of $30.70 in January 2016.

Most recent average peak was $81.03, for the month of October 2018.

From this pattern of falling peaks, we can see that the stimulus being used recently (which includes Quantitative Easing in some parts of the world) has become less and less effective at stimulating demand for food and energy products.

It looks as though growing debt at ever-lower interest rates is becoming a less effective workaround for the economy’s real need, which is a need for a rapidly growing supply of under $40 per barrel oil and other low-priced energy products.

Oil prices can be a problem in two different directions: (a) Too high for consumers or (b) Too low for producers.

From the Point of View of the Consumer. Many people have had the “Ah Ha” moment, in which they have figured out that high oil prices are a problem from the point of view of consumers. In part, they have deduced that these high oil prices may mean that we are “running out” of cheap-to-extract oil. Processes are becoming more complex, and as a result, consumers need to pay more to cover the higher cost of extracting and refining the oil.

But there is a related issue: Higher oil prices are likely to cause recession. If oil prices rise, the prices of many different types of goods and services (such as food, goods transported by truck or airplane, and vacation travel) rise at the same time. Wages don’t rise as quickly, in part because it is the true energy content (measured in Btus, barrels of oil equivalent, or something similar) that the economy requires. If the economy needs to dedicate a larger share of its resources to producing energy products, this is an issue that is akin to growing inefficiency. There are fewer resources remaining (such as human labor, metals, fresh water, and energy products) for investment that might provide goods such as new homes, cars, clothes and air conditioning.

With fewer resources to use, the economy reacts by shrinking back. I think of the situation as being akin to the way a chemist might “make a smaller batch,” if the quantity of one necessary reagent is low. An adequate supply of energy products is what makes the economy operate as it does; if buying an adequate amount of energy products becomes too expensive for consumers, a cutback in the buying of discretionary goods is forced on the economy (Figure 8). Lowering interest rates tends to make the debt repayment portion on new purchases lower, helping to alleviate the squeeze.

From the Point of View of the Oil Producer. There are oil producers of many kinds, including:

Tight oil producers from shale operations,

Heavy oil producers in places such as Canada and Venezuela,

Producers of oil from deep water such as Brazil and Angola, and

Middle Eastern oil exporting countries that seem to have a very low direct cost of oil production.

Strange as it may seem, Middle Eastern oil exporting countries are among the most vulnerable to problems associated with continued oil low prices. The reason why these countries are so vulnerable is because their entire economies are oriented toward oil and gas production. They often have large populations with inadequate income unless the government provides them with handouts or with programs that provide jobs. If these governments need to cut back too much, there is a real danger that the governments will be overthrown. In fact, the population may break down into warring factions. Oil production may stop because of internal disorder.

It is because of issues such as these that the OPEC countries have cut back on oil production, in the hope that prices would rise to more acceptable levels for their countries. Fiscal Breakeven prices, relating to the level of oil prices that are needed so that each government can collect sufficient taxes for its budget, are published from time to time.

Now that oil prices have been low since late 2014, Middle Eastern countries won’t admit to the true level of oil prices that are needed to operate their countries in the way that they have in the past. Their populations have been rising faster than their oil production, so it is hard to believe that the oil prices that the countries truly need, if they do not cut back on programs, are any lower than the amounts shown in Figure 9. At about $60 per barrel, the current Brent Oil price is clearly far too low for the major oil producers of the Middle East.

Shale and heavy oil producers are often less vulnerable than Middle Eastern producers, because the entities funding their operations (that is, buyers of shares of stock and providers of debt) believe that “of course” oil prices will rise in the future because of scarcity. Because of this, they are willing to provide additional funding, even when a recent owner has gone bankrupt from low prices. Middle Eastern oil producers have less of this benefit. If the money isn’t available for major programs, they are forced to cut back. Growing debt is unlikely to cover more than a portion of the shortfall.

There are other producers in the energy price “stack” in Figure 4 that are vulnerable to collapse or bad outcomes from continued low energy prices. One example is coal producers in China. China seems to be experiencing Peak Coal because of continued low coal prices; While new mines have been opened, they do not act to increase the total quantity produced, because so many mines needed to be closed because they were losing money at current low prices.

Figure 10. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

If the world economy is hoping for China’s increasing demand to pull the world economy forward in the future, it is likely kidding itself. China cannot expect imports to make up for its lack of growth in coal production. China’s lack of adequate energy supplies likely underlies the tariff issue that we hear so much about. There is a need to pull back production of goods from China, if China doesn’t really have the energy resources to continue in the role it has been playing.

The big question is how high oil prices will be in the future

The contention of the IEA and many others is that energy prices can rise arbitrarily high. For example, the IEA showed the figure I have numbered Figure 11 in its World Energy Outlook 2015 .

Figure 11. IEA Figure 1.4 from its World Energy Outlook 2015, showing how much non-OPEC oil can be produced at various price levels.

The big groupings in Figure 11 are

Conventional Crude (such as from the Middle East and perhaps deep water like Brazil),

Tight Oil from Shale, and

Extra Heavy Oil and Bitumen (such as from Canada and Venezuela).

Evidently, in 2015, the IEA believed that $300 per barrel oil prices were not too high to show as a possibility on a chart. With $300 per barrel oil, there would certainly be enough oil. At such a high price, it might be possible to move the city of Paris, France, out of the way and extract the tight oil from shale underneath it!

Unfortunately, in the real world, prices cannot rise this high. Market prices are set by the laws of physics. The economic limit we reach is a price limit that pushes the economy back into recession. We have seen in Figure 7 that this price limit seems to be dropping lower and lower, over time. In fact, I am one of the coauthors of an article published in the journal Energy called, An Oil Production Forecast for China Considering Economic Limits. This 2016 article makes the point that the economic limit we are reaching is a limit on how high oil prices can rise. I am the lead author of Section 2, which discusses this issue at length. If prices cannot rise high enough, the vast majority of the oil that seems to be available based on published reserve amounts and geological surveys cannot really be extracted.

Whether there are ways to raise oil and other energy prices higher than they are now remains to be seen.

Why don’t standard models forecast low oil prices in the future?

Economists have put together a simple model of how the economy works. In their model, there are always substitutes. The only thing that goes wrong seems to be that prices rise, if there isn’t enough supply. These rising prices encourage greater supply and substitution. The type of chart a person typically sees is a Supply and Demand curve as shown in Figure 12.

They have never considered a situation where energy products are deeply buried within essentially all goods and services that are made. If there isn’t enough supply, a “smaller batch” of the world economy is made. We think of this as recession, but it can take on other forms as well:

Depression

Wars

Epidemics

Defaulting debts; falling prices of assets

Failing governments and intergovernmental organizations

Collapse of the central government of the Soviet Union in 1991

UK’s decision to leave the European Union

Increasing conflict between political parties and between countries

A reduction in globalization

Ultimately, the collapse of a civilization

Economists have not understood the connection between physics and the economy. There is a need for a sufficient quantity of affordable energy products every moment of every day. In fact, we seem to need a vastly increased quantity of inexpensive-to-produce energy supplies right now if we are to fix the world economy’s problems from an energy point of view. The “lower interest rates and more debt” way of hiding problems seems to be reaching an end point. If nothing else, interest rates today are close to as low as they can go.

Is the economy approaching a singularity?

In physics and math, a singularity is a point at which a function takes an infinite value. We end up with a situation that seemingly cannot exist. It is like dividing the number 1 by the number 0. No matter how many times that the number 0 is added together, it will never equal 1.

The economy seems to be reaching an equally strange situation. It is not a situation where we are running out of oil; it is a situation of too much wage disparity, and this wage disparity makes the prices of many commodities too low for producers of these commodities. For example, farmers cannot afford to pay their mortgages. And prices for all fossil fuels and many metals are too low for companies extracting these materials to make an adequate profit for reinvestment and taxes. The problem is not simply low oil prices.

This situation of excessive wage disparity is related to globalization, with many workers around the world earning very low wages, so that they cannot afford goods such as homes and cars. It is related to the increased use of robots substituting for manual labor. It is also related to wage disparity within countries as jobs become increasingly specialized.

As this situation plays out, energy prices fall when common sense would seem to suggest that they should rise. In fact, the problem of falling prices extends to more commodities than fossil fuels and food; it extends to minerals of many kinds, including copper and aluminum.

In such a situation of falling commodity prices, we can expect many related problems. For example, governments of countries that depend on the revenue of these exports may fail, leading to Balkanization of these countries in some cases. A wide range of debt defaults can be expected, leading to failing financial institutions that need to be bailed out. Rapidly changing relativities among currencies are likely to put markets for derivatives at the risk of failing. Needless to say, stock markets are likely to be adversely affected. So-called renewables will quickly fail because they are currently dependent on fossil fuels for repairs and the electric grid. In fact, it is hard to see any aspect of the world economy that can continue unaffected.

How does what appears to be an approaching calamity play out?

Perhaps it is fortunate that we don’t really know. Collapses of early economies seemed to take many years, typically over 20 years. Today, the world economy depends on global supply chains and the electric grid. The financial system is also very important. It is hard to believe that the overall system can stay together for many years, but perhaps, in parts of the world, it can. We just don’t know.

Given how connected the economy seems to be, and how widespread the problems seem to be at the singularity we are reaching, it almost appears that there is a plan behind what is happening. From what we can observe, there seems to be some literal higher power behind all of the energy flows that we observe in the universe. This literal higher power seems to have put into place all of the laws of physics. This literal higher power seems to also be behind all of the self-organizing elements within the universe, including humans, ecosystems and economies. I cannot help but wonder whether there is some plan for what is ahead that we don’t understand.

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About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

1,469 Responses to Debunking ‘Lower Oil Supply Will Raise Prices’

In the beginning, mankind was given dominion over the earth and all of its resources (including oil). He was commanded to nurture, manage and develop this large but finite planet.
He was granted freedom to choose without any interference. It was a test. A limited test, for a limited period of time. Each drop of oil or lump of coal was a grain of sand in an hourglass. The peak of exploitation of energy resources is also the marker for peak civilization. We are all part of the test. What kind of paradise did we create?

At the risk of sounding coy, maybe its time to entertain Jeff Bezos plan and get off this dinky little planet, with its fast depleting resources. Solar power is unlimited in space. And the near earth asteroids that can provide humanity with all of the minerals it needs for centuries to come. If the richest men in the world take this idea seriously, maybe the rest of us should too.

Maybe Jeff could start out building a space taxi that could take an astronaut to the Space Station. The only way we can get them up there now is to pay Russia $80 milion for a seat on their rocket.
Oh yeah. We’re going 250,000 miles to the Moon when we can’t send a man 350 miles to the Space Station. While we’re dreaming, how about we trip on out to Mars…..only 30 or 40 million miles. Go Jeff Go.

Today’s models replace yesterday’s fairy tales. The main difference is that people believe today’s models, no matter how absurd, while they could see that yesterday’s fairy tales were not to be taken literally.

I agree with what you write. A lot of work and thinking. The oil affordability problem seems to be different from country to country. The quantitative easing in response to the financial crisis (which was caused by the 2008 oil price shock) has created an asset bubble which also made housing unaffordable in countries like Australia. Immigration of rich Chinese has made this situation worse. A 1950s charmer in our suburb is now snatched up by them for a cool A$ 2 million, driving the locals out of Sydney to smaller towns with commuting times of 2 hours.

Interesting also the relationship between income inequality and energy consumption.

The events in Hong Kong brought me to look into the inequality problem and I found this 2015 report on China:

So we can expect some action in the Strait of Hormuz soon. If some sort of military confrontation were to happen there, oil prices will certainly go very high, depending on the type and length of disruptions. But as you are saying, this would induce a recession at a time when there are so many other problems like Brexit.

I suspect sanctions and trade wars cover up some real supply/demand issues.

The points you raised are never discussed in the mainstream media. Our governments are too busy trying to grow the economy, at all cost. I doubt they have the system dynamics skills to analyse, let alone understand what is going on. They have surrounded themselves with hire-and-fire departmental directors who sing from the song sheet of their Ministers uneducated in physics. That’s why they can’t produce realistic assessments.

I looked at the Piketty article on the growth of income inequality in China in recent year. I thought it was very interesting. It fit with my perceptions as well, when I visited there. I even had an opportunity to visit a wealthy family in their home, on my visit.

According to the article,

For recent years, we find the income share of the top 10% to be around 41% of total national income (as opposed to the 31% suggested by surveys), and the income share of the top 1% to be approximately 14% of national income (as opposed to 7% suggested by surveys). According to our series, the share of national income going to the top 10% rose from 27% to 41% between 1978 and 2015, while the share for the bottom 50% fell from 27% to 15%. The urban-rural income gap increased, but income concentration also rose significantly within both urban and rural China.

Alex Turnbull, of the Singapore-based hedge fund Keshik Capital, said the port slowdown was the result of wide-ranging changes in the Chinese economy. A huge expansion of rail infrastructure in the past decade had enabled China to begin exploiting its vast inland coalfields in areas such as inner Mongolia and Shanxi in a way that was not previously possible, he said.

Thermal coal imports were unheard of before 2008, he said, but they boomed to fuel the massive economic stimulus ordered by Beijing in the wake of the global financial crisis. At the same time, the country’s national development commission started adding millions of tonnes in freight capacity to the Chinese rail system so that cheaper domestic coal could be shipped to coastal centres of heavy industry and population.

“What is happening now is that the infrastructure schemes have caught up with demand and therefore imports are going to dry up,” Turnbull said. “We’ve been waiting for the time when China turns off the demand for Australian coal imports and this appears to be the moment.”

My guess is that China desperately needs the internal price of coal to stay high enough to cover the higher costs of the new coal by rail system. The only way it can do this is by finding excuses to cut off Australian coal imports because coal by ship is likely cheaper than coal by rail. China needs the jobs for the people of China. It needs a positive return on its big investment in an extended rail system.

“Stocks opened lower on Friday after China said it will slap new tariffs on U.S. goods… China will implement new tariffs on another $75 billion worth of U.S. goods, including autos. The tariffs will range between 5% and 10% and will be implemented in two batches on Sept. 1 and Dec. 15.

“This is the latest escalation in the trade war that has been going on since last year…”

“The White House is reportedly discussing a variety of options to try to juice U.S. economic growth ahead of the 2020 election, including a rotation of Federal Reserve governors that would make it easier to check the power of Chairman Jerome Powell.”

Gas prices could drop under $2 this fall, here’s where
The average price for a gallon of gas has dropped 15 cents in the past five weeks, and AAA is predicting them to fall even farther this fall, thanks to lower crude oil costs, a reduction in demand and a shift to less expensive winter blend fuels.
The organization expects the national average to hit $2.40 in the coming weeks, 20 cents less than the current price. Some southern and southeastern states may even see prices below $2.00, barring a major hurricane striking the region
According to AAA’s price tracker, the cheapest gas in the country right now is in Louisiana, where a gallon goes for $2.22 on average..

All is well with the world, , gas at the pump and food at Super Walmart …perfect

There was a shocking and unprecedented shortage on the supermarket shelves this week when we shopped. Some people discourage talking to deniers about what is happening, but I wonder? I’ve been talking with my spouse, who has long been reluctant to believe what I’m saying. But at the the supermarket, SHE was pointing out how the situation reflects the times. So people will get it if you take every opportunity–but don’t push–to make the point. If you can call it that, it seems very positive to me.

https://en.wikipedia.org/wiki/Khazzoom%E2%80%93Brookes_postulate “that improvements in energy efficiency lead to ever and ever-greater levels of energy usage” I may be reaching my self belief supporting conclusions but wouldn’t this mean that as resource extraction costs rise consumption decreases regardless of price? If so from a financial standpoint shouldn’t OPEC not limit supply but establish a price for oil that covers the cost of oil extraction including societal costs if factors other than supply are bigger drivers of price? How does this effect ideas about free markets as a physical reality based philosophy?

This is related to the converse issue I mentioned in an earlier comment. I said, “Growing inefficiency in producing energy products (i.e. higher inflation-adjusted prices) would lead to less use of energy products.”

This all depends on highercosts being able to be passed on a higher prices. The economy doesn’t really allow higher prices of energy products for very long. It makes the economy shrink back in recession. Or it readjusts relativities among the currencies, with a similar affect for the currencies losing out.

Regarding your question, ” If so from a financial standpoint shouldn’t OPEC not limit supply but establish a price for oil that covers the cost of oil extraction including societal costs if factors other than supply are bigger drivers of price?”

Prices aren’t set by OPEC. They are set by the laws of physics. OPEC is a price taker. Commodity markets are very strange. Prices bounce all over based on supply and demand.

I don’t remember hearing about the Khazzoom–Brookes postulate. Wikipedia says,

In the 1980s, the economists Daniel Khazzoom and Leonard Brookes independently put forward ideas about energy consumption and behavior that argue that increased energy efficiency paradoxically tends to lead to increased energy consumption. In 1992, the US economist Harry Saunders dubbed this hypothesis the Khazzoom–Brookes postulate, and showed that it was true under neo-classical growth theory over a wide range of assumptions.

Clearly the converse would likely also happen: Growing inefficiency in producing energy products (i.e. higher inflation-adjusted prices) would lead to less use of energy products. This would tend to push the economy downward, because the economy requires energy consumption. High costs of energy products tend to cut off consumption. This is a big reason why a transition to a higher-cost energy system doesn’t work, without rising debt and lower interest rates.

Coming back to the original postulate, that of increased efficiency acting to increase use, a lot of different factors would seem to come into play. For example, going from cathode ray tubes to flat screen monitors for televisions produced a huge savings in energy. But pretty much everyone in the US who wanted a television already had one, by the time this transition took place, so I doubt that the efficiency change increased consumption, except to the extent that the lower electricity consumption left consumers with more income that could be spent elsewhere.

A big issue on, say, an electric car being in some sense more efficient than a car with an internal combustion engine actually producing fuel savings has to do with how the whole system operates, including charging stations and financing the cost of these vehicles.

Wow! I didn’t expect this. The excuse is “10 years after The meeting is in Paris. I see Steve Keen, the economist from Australia, is a major speaker. Also Jean-Marc Jancovici, who is the author of the Manicore.com website, among other things. Wipipedia says he is a French engineering consultant, energy and climate expert. He is a consultant, professor, conference speaker, writer, and independent columnist. He is co-founder and associate at the Carbone 4 consultancy firm, and the founding president of the think-tank, The Shift Project.

I’m french, and I first discovered these ideas about energy, economy and finite ressources with his conferences on youtube. He’s very good at explaining all these concepts to a very large audience. He also prefaced the new french edition of “Limits to Growth”. Just like you, he’s very skeptical about “renewables”, unlike you he believes reducing co2 emissions is an emergency

I think his proposal to store off peak energy by pumping water up for gravity potential interesting. IMO he sees some of whats coming. Heck i certainly don’t have a crystal ball. I don’t think he quite gets it though. He proposes that the price of oil effects economies independent of policies but doesn’t seem to believe (as I do) that the energy entering IS the economy. IMO. I wish it was as simple as just curbing consumption being the righteous path and continuing consumption being a path of dictatorship and fascism.

“I am not sure that the judgement of history will be very kind with all of us that refuse the voluntary cure to prevent – if it is still possible – such an outcome, which bears a very simple name: a raise of the taxes. Between a progressive “deconsumption” of hydrocarbons, which is of course full of inconvenients, and a dictatorship (that incidentally generally brings a much faster “deconsumption” !) resulting from a strong destabilisation of the economy, it is not sure that our descendants will forgive us to have given them the latter because we refused the first ! “

This interview is really very good. It was from earlier in 2019, so it is quite recent.

He is very clear in explaining why wind and solar are not replacements for other types of energy. It is a combination of the many things, including way too much metal use needed and the huge storage requirements if the intermittency is to be overcome.

He points out that policymakers don’t want to bother citizens in general, by requiring them to cut back in energy usage or in population. Instead, all of the cutbacks are moved over to the areas of the engineers. That way not many people are bothered by the proposed changes.

He talks about how ridiculous CO2 sequestration is. As an engineer, he knows better than I do about the specifics involved. I have not tried to write about this because a person needs the specifics. But I have known since the first talk I heard by an engineer about the problems involved with CO2 sequestration that the whole concept is just plain ridiculous. Many Oil Drum articles pointed in exactly the same direction.

It is possible to do storage for off peak energy by pumping water up but it doesn’t work well for storing seasonal intermittencies. Our big problem is storing energy from summer to winter. This approach is for little peaks, not big ones. We need a huge fossil fuel backup system, which is paid adequately for its services.

Ten years later is a nice excuse. Yup no need to panic just looking at the past. Id be more optimistic if the topic was BAU extend and pretend, effective strategies. Nevertheless it is certainly a interesting development. We will see if there is any content… You could use a Paris vacation Gail?

Yep, we posted some of his subtitled videos (presentations) over the years here..
But there were “some issues” with him like still sticking to the -klimate- angle of the conventional story etc. But in his case it seemed more like a necessary step in order to speak about the depletion and possible demand destruction dynamics..
He also talks about gov crash mandates (and their timing) to alleviate the situation.

It is not clear to me that Jancovici understands that the economy cannot really shrink back. There are too many financial systems affected. It would be like trying to go backward with my Leonardo Sticks model. It just doesn’t work.

It is also not clear to me that Jancovici understands the fact that prices tend to fall too low for energy producers, and this pulls the economies of oil and other commodity exporters down. They don’t collapse immediately, but with a lag.

He comes to the fields with an engineering background. The engineering background paints a clearer picture of what precisely goes wrong with a solution such as carbon sequestration. But it tends to miss the financial aspects.

I have not read enough of Jancovici’s work to know for certain that he does not understand these things. I am sure that the conveners of the OECD conference would like a speaker who thinks that there is no problem with the economy shrinking back.

Yes, it’s puzzling, because at times he is evidently capable of using some sort of whole system dynamics approach and reasoning. Although, it could be self restrain – censorship not to go there where you lead..

Frankly, if adviser people of his caliber could extend the quasi BAU after next GFC for decade or two, it’s perhaps a worthwhile effort, albeit doomed to mid-term/longer term failure..

Several people here, at Surplus, and few other places, seem to guesstimate (~know) the general direction how to transition forward, but that’s politically and socially not possible to advocate for today. And even during next GFC when larger pop segment gets wind of the problem to smaller degree it would be still out of question to offer such radical downscale or rather high complex industrialism abandonment on purpose.

Everywhere is freaks and hairies
Dykes and fairies, tell me where is sanity
Tax the rich, feed the poor
‘Til there are no rich no more?
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
Population keeps on breeding
Nation bleeding, still more feeding economy
Life is funny, skies are sunny
Bees make honey, who needs money, Monopoly
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
World pollution, there’s no solution
Institution, electrocution
Just black and white, rich or poor
Them and us, stop the war
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you

A consonant is a sound made using a vocal gesture involving interruption or other controlled actions performed by the so-called “articulators” such as the tongue, teeth (jaw), or lips on an air column emerging from the human vocal tract. By contrast, vowel sounds are produced when the air column is merely shaped by the chamber it is passing through, not manipulated by articulators. As an illustration, try saying “a bottle of beer” without moving your tongue, teeth or lips and you’ll get the general idea.

Accordingly, I would guess that consonants are called consonants because each the production of consonant is consonant with a specific set of positions and movements of the articulators.

Language is mankind’s pivotal expression of our difference from other species. To what extent does the difference between finding meaning in the stops of the air vs the so called vowels in between (tonal) define us?